New Advisory Fuel Rates

HMRC has announced New Advisory Fuel Rates, applicable from 1st June 2018.

These rates apply to employees with company cars and those who reimburse employers for their private fuel use.

New Advisory Fuel Rates from 1 June 2018

Engine size

Petrol – amount per mile

LPG – amount per mile

1400cc or less

11 pence

7 pence

1401cc to 2000cc

14 pence

9 pence

Over 2000cc

22 pence

14 pence

Engine size

Diesel – amount per mile

1600cc or less

10 pence

1601cc to 2000cc

11 pence

Over 2000cc

13 pence

Hybrid cars are treated as either petrol or diesel cars for this purpose.

What Does This Mean For Employers and Employees?

Employers who pay employees at or below the pence per mile payment applicable to their engine size and fuel type, will not attract any Class 1A National Insurance liabilities.

There will also be no charge to employers if a higher rate per mile is paid to employees, if the payments relate to business travel only. This will however mean that any excess paid to employees will be treated as earnings and Class 1 National Insurance will be payable.

For employees repaying employers for their private use, provided that all calculations are correct, HMRC will accept that there is no fuel benefit charge payable.

Employers can use the previous rates for up to one month from the date the new rates apply, which can be found here.